Perspective: Expanding the universe of exploration capital

Perspective Issue Twenty - March 2, 2017

Exploration Expenditures Building on Improved Metal Prices

By: Gary Baschuk, VP Senior Mining Analyst

S&P Global Market Intelligence released the results of the 2016 Worldwide Mining Exploration Trends. The year 2016 saw a continued decline in nonferrous exploration spending, although the trend appeared to be reversing in the latter half of 2016. From the record high of over US $20.5 billion spent in 2012, 2016 was dismal at only $6.89 billion and down 21% from 2015. Investment in the exploration sector was directly influenced by lower metal prices as illustrated in Figure 1.

Source: S&P Global Market Intelligence, Worldwide Mining Exploration Trends

During the budget-tightening years from mid-2012 into 2016, major mining companies cut exploration staff and budgets, monetized assets and focused on brownfield or near-mine site projects that would require minimal capital to merge into the existing production lines. Exploration was neglected. Some of the juniors changed business models and others disappeared. The good projects with good management survived and now we’re beginning to see the major’s step back into the exploration frontier with strategic investments in quality projects while corporate financings are returning on a more selective, prudent basis. The increase in metal prices from 2016 appears to be providing the investor confidence needed.  In 2016, Aluminum prices were up 14%, nickel up 13%, zinc up 61%, copper up 18% and on the precious metals side, gold was up 9% and silver up 18%.

On a country by country basis, 2016 exploration spending was highest in Canada at 14% followed closely by Australia at 13% indicative of the positive political climates and endowment of mineral wealth.  In Canada, Ontario led the way with 23% of the nation’s expenditures followed by Quebec at 18%, reflective of the mineral potential and we believe the tax incentives available to the exploration companies through CEE and CDE. Gold, at 50% of the spending, was the commodity of choice.

With the recent rise in metal prices created by increased consumer confidence, expected government spending on infrastructure, combined with political uncertainty and inflationary fears, the exploration focused companies are being able to finance once again and we expect the trend to continue going into 2017 with gold being the primary benefactor.

PearTree Spotlight

PDAC Convention

The PDAC officially commences on Sunday. If the number of corporate sponsored events during PDAC is any indication, we expect this year’s conference attendance to surpass last year’s 22,000. As was the case at Vancouver’s Cambridge House Conference and AME Round-up, attendance was high and the atmosphere positive. In the past month, the gold price has increased over $58 or 4.9% bringing more optimism to the markets accompanied by a rash of corporate financings. During the World’s largest mining conference, we expect the positive atmosphere to continue accompanied by a steady flow of press releases.

PearTree is proud to be a bronze sponsor at this year’s convention. Please join us at our sponsored events on Sunday, March 5th at the “Commodities and Market Outlook” session from 1:00pm – 5:00pm, and then at the Opening Day Reception from 4:00pm – 6:00pm.

PearTree Securities’ CEO, Lisa Davis, will be moderating a panel as part of the Student-Industry Forum “Mentorship: Women in Mining” on Monday, March 6th from 3:30pm – 5:00pm in room 714, and VP Senior Mining Analyst, Gary Baschuk, will be chairing the session “Gold: Exploration 1” on Monday, March 6th from 10:00am – 12:00pm in room 802.  Looking forward to seeing you there!

Agnico Eagle’s Meadowbank Mine

PearTree is proud to feature the Agnico Eagle METC Meadowbank case study video. The Meadowbank open-pit gold mine in the Kivalliq region of Nunavut – approximately 300 km west of Hudson Bay and 110 km by road north of Baker Lake – is Agnico Eagle’s first Low Arctic mine. This Canadian success story originated as a result of METC and flow through financing.

To learn more about the Meadowbank mine, click here.


Trent Mell Leaving His Role at PearTree

Trent Mell will be leaving his role of Co-President & Head of Mining at PearTree Securities to  join First Cobalt Corp as President and CEO. During Trent’s time with PearTree, the company experienced great success and a record year in 2016. Also in 2016, joining Lisa Davis, CEO and Danny Mah, Managing Director, Oil & Gas were Dave Donato, Co-President & Head of Banking and Gary Baschuk, Senior Mining Analyst, both experienced professionals and highly respected in the sector.  Trent continues as an advisor to PearTree.

PearTree is the market leader in flow through share donations providing more than half of all exploration and development flow through equity in Canada.  The evolution of a Canadian innovation.

Analyst Notes

By Gary Baschuk, VP Senior Mining Analyst

Below is a compilation of Selective Press Releases from Canadian Companies released since our last Perspective Issue. For past Analyst Notes please click here.

Equity Research

Balmoral Resources Ltd. (BAR-TSX.V)

2017 Drilling Starts as Bug South Extended to 350 m Vertical

Balmoral released the final assay results from the 2016 drill program.  Results were from two holes completed on the Bug South Zone and two holes from the Detour West property. Previously, Balmoral announced the commencement of the 25,000 m 2017 winter drill program with two rigs currently active on the Bug South Deposit.

Drilling at Bug South extended mineralization to 350 m vertical with an intercept of 3.51 g/t gold over 9.16 m from the Upper Bug Zone at downhole depths of 442.25 to 451.41 m and also a deeper intercept from Lower Bug (footwall to a porphyry that separates the Upper from the Lower Bug Zone) which returned 8.40 g/t gold over 1.75 m from 472.48 to 474.23 m. The mineralization appears to pinch and swell similar to most Archean systems and we’d expect mineralization to continue further at depth.

Other intersections from Bug South include:

MDE-16-252: 1.67 g/t gold over 11.65 m (including 7.53 g/t over 1.00 m) in Upper Bug, and

  • 1.18 g/t gold over 14.57 m in Lower Bug.

MDE-16-253A: 2.48 g/t gold over 17.89 m (including 12.70 g/t over 0.83 m) in Hanging wall Porphyry,

  • 0.48 g/t gold over 11.87 m in Upper Bug,
  • 0.32 g/ gold over 9.61 m in Lower Bug.

MDE-16-254: 4.67 g/t gold over 3.51 m in 221 Zone,

  • 6.78 g/t gold over 2.40 m in 221 Zone,
  • 3.87 g/t gold over 3.02 m in Upper Bug.

MDE-16-257: 4.64 g/t gold over 0.54 m in 221 Zone,

  • 3.51 g/t gold over 9.16 m (including 20.30 g/t over 1.36 m) in Upper Bug, and
  • 2.14 g/t gold over 7.34 m (including 8.40 g/t over 1.75 m) in Lower Bug.

Drill testing the Detour East Property, located on the Quebec/Ontario boundary adjacent to Detour Gold’s (DGC-TSX) Detour Lake Mine Property, returned mixed results highlighted by a wide intercept of 0.91 g/t gold over 14.25 m in hole DTE-16-18. A second mineralized zone was intersected and returned 1.04 g/t gold over 3.55 m. The hole targeted the down-plunge extension of the Lynx Zone. Although the grades are not high, the continuation of the mineralized corridor is positive and we believe should be tested on strike and down-plunge for potential higher grades concentrated in structural traps.


Source: Balmoral Resources Ltd.

For complete drill results and cross sections, please refer to the press release at:


Osisko Mining Inc. (OSK-TSX)

Massive Drill Program continues to Yield High-Grade Gold at Osisko’s Windfall Lake

Osisko’s Windfall Lake Project is in the midst of a 400,000 m drill program utilizing 12 rigs with five additional rigs scheduled to commence by month-end. The property is located between Chibougamau and Val d’Or in northern Quebec. To date, mineralization in the Main Zone reportedly goes from surface to depths of 500 m occurring as stacked lenses in an area measuring 600 m wide by over 1,400 m long and is open for expansion both along strike and at depth.

The drilling includes definition drilling above the Red Dog Intrusion, expansion drilling above and below Red Dog, testing the Main Zone toward the northeast, and exploratory holes on the property.

Results from three expansion and infill holes drilled at Caribou and Underdog were released.

Highlights include:

OSK-W-16-743-W2: 9.10 g/t gold over 2.6 m (including 27.5 g/t over 0.8 m) – FW2 Underdog

OSK-W-16-754: 9.76 g/t gold over 7.3 m (including 34.6 g/t over 1.6 m) – FW3 Underdog

OSK-W-16-762: 17.7 g/t over 1.0 m – CS1 FW Caribou, and

  • 7.61 g/t gold over 7.0 m – CS3 Caribou, and
  • 8.95 g/t gold over 2.1 m – CS3 FW Caribou, and
  • 4.47 g/t gold over 3.0 m (including 7.24 g/t over 1.0) – New Zone at Caribou

Full descriptions of the mineralization and more details can be found at:

In addition, Osisko announced results from a single hole testing the Lynx foot wall zone along the Lynx Corridor.

Drill hole OSK-W-16-761 returned 19.4 g/t gold over 2.0 m from 54.5 to 56.5 m and also 64.3 g/t gold (cut) over 2.3 m from 64.7 to 67.0 m. The hole reportedly tested the up-dip extension of the Lynx FW Zone and is located 87 m above OSK-W-16-760 which returned 42.7 g/t gold (cut) over 9 m.

Source: Osisko Mining Inc.

For full details, please refer to:


Seabridge Gold Inc. (SEA.TSX)

Deep Kerr Inferred Resources Expand to 19 mln oz Gold and 17.3 Bln lbs Copper

Seabridge announced an update to the Inferred Mineral Resources on the Deep Kerr Deposit at the 100% owned KSM Project in northwestern BC. The resources were calculated assuming a block cave mining method and resulted in an additional 3.0 mln ounces of gold and 2.1 billion pounds of copper above the Inferred estimate announced in the 43-101 compliant Technical Report on KSM of Sept 2016. In addition, according to the company, the resources fall within the conceptual mine plan and are expected to further enhance the projects economics.

Source: Seabridge Gold Inc. and PearTree Securities Inc.

For complete details of the calculations and assumptions, please refer to the press release at:


Marathon Gold Corp. (MOZ-TSX)

Valentine Lake Resource Update adds to Open Pit Potential

Marathon Gold released a new 43-101 compliant Resource Estimate for the entire Valentine Lake Property prepared by Micon International. Of note is the grade at 1.84 g/t gold for Measured and Indicated, open-pit potential ounces totaling almost 1.3 mln oz plus Inferred, potential open-pit resources of 562,600 oz grading 1.98 g/t. Mineralization is hosted in flat-lying, stacked, quartz-tourmaline-pyrite lenses occurring within a 40-100 m wide, near-vertical corridor of alteration that is open for expansion along strike.  The company reports that recent metallurgical tests have yielded recoveries of 93 to 98% using conventional milling and 50-70% from heap leaching.

The 2017 exploration program is focused on expanding the resource and detecting additional mineralization. The company notes that an experimental geophysical method will be employed to detect quartz-tourmaline-pyrite veins beneath overburden along an area 2 km from the Marathon Deposit.  In addition, drilling will continue to test the continuation of mineralization both along strike and at depth of the four deposits with holes oriented perpendicular to strike and also near vertical along strike.

Access to the Valentine Property is via a year-round gravel road and the property is proximal to Newfoundland’s main electrical grid. In addition, Marathon maintains a 50 person, year-round camp.

Source: Marathon Gold Corp.

For more details on parameters used for the resource calculations and the mineralization, refer to:


TMAC Resources Inc. (TMR-TSX)

Hope Bay Nearing Commercial Production

TMAC  is on track to start commercial production at the Doris Mine and Mill in Q1/17. With the plant commissioned and the first gold bar poured, TMAC is focusing on optimizing the plant by feeding stockpiled ore grading 14.5 g/t into the circuit, training staff and ramping up to steady-state production. Plans are to run the plant at 1,000 tpd in 2017 using the 121,600 tonne stockpile and ramp up to 2,000 tpd in late 2017. The second Gekko Systems Python plant (crushing, grinding and flotation concentrate producing cell) is expected to be delivered by sealift and in operation by year-end. In order to feed the plants, production from Doris will increase from 1,000 to 2,000 tpd.

TMAC also provided 2017 guidance at:

  • 130,000 to 140,000 oz produced from 275,000 tonnes of ore mined at an average grade of 13 g/t. The plant is expected to process 325,000 t of ore
  • All-in Sustaining costs of $US750/oz and Cash Costs of US$600/oz
  • Capital Expenditures: $15 m sustaining, $35 m Pre-prod and expansion, plus $22 m exploration

For more details, please refer to the MD&A, AIF and Year-end financial statements in conjunction with the press release at:


Azimut Exploration Inc. (AZM-TSX.V)

Geophysical Survey Targeting Chromite Commences on Eastmain West Property

Azimut has commenced a ground-based gravity survey targeting chromite horizons within a mafic-ultramafic intrusive. Recent channel samples over the area yielded 17.21% Cr2O3 over 7.54 m and 33.2 % Cr2O3 over 3.55 m. The survey is planned over the central portion of a 4-km long horizon within the mafic-ultramafic intrusive that exhibits a strong magnetic and electromagnetic signature. The survey will be carried out over an area of 1,200 m by 400 m and intends to characterize the two known chromite prospects, Dominic and Sledgehammer.

For more details, please refer to Azimut’s press release at:




Important Information and Legal Disclaimers

This report has been prepared for general information purposes only and should not be considered either a solicitation for the purchase or an offer of securities. This research report does not constitute a recommendation. The securities mentioned in this report may not be suitable for all types of investors. The information contained in this report is not intended as individual investment advice and is not designed to meet any particular investment objectives, financial situations, or needs. Nothing in this report constitutes legal, accounting or tax advice.

Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but its accuracy cannot be guaranteed. PearTree Securities Inc. (“PT Securities”) and/or its affiliates and/or any of their respective officers, directors, and representatives (collectively “PearTree”) does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by PearTree or individual research analysts). Any opinions or analysis herein reflect the views of the Analyst as at the date appearing above, and are subject to change without notice. The Analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in this report.

PearTree may, in exchange for remuneration, participate in the financing of companies mentioned in this report. PearTree analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income. PearTree and members of their families may hold positions in the companies mentioned in this report and may buy and/or sell these stocks on the market or otherwise.

PearTree shall not be held liable for any loss or damage resulting from the use or the implementation of the information contained herein, except to the extent that liability may arise under specific statutes or regulations applicable to PearTree. The investments to which this report relates can fluctuate in value.

Dissemination of Research

Research reports are disseminated through electronic medium or in printed copy. Clients may access reports on our website, or receive publications directly via email. PearTree strives to ensure all recipients receive research in a timely manner and at the same time.

For Canadian residents: PT Securities is registered as an Exempt Market Dealer, a Registered Portfolio Manager and Investment Fund Manager pursuant to NI-31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. PT Securities is a subsidiary of PearTree Financial Services Ltd., an unregistered firm that consults to charities on tax and other matters related to a flow through share donation program.

For US residents: The information provided herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country including the United States, where such distribution or use would be contrary to law or regulation or which would subject PearTree to any registration requirement within such jurisdiction or country.


Analyst Certification

I, Gary Baschuk, hereby certify that the views expressed in this report accurately reflect my personal views about the subject and the issuer.


Important Disclosures

Of the companies included in the report the following Important Disclosures apply:

Ticker Company 1 2 3 4 5
AZM-TSX.V Azimut Exploration Inc.
BAR-TSX Balmoral Resources Ltd.
DGC-TSX Detour Gold Corp.
MOZ-TSX Marathon Gold Corp.
OSK-TSX Osisko Mining Inc. x
SEA-TSX Seabridge Gold Inc.
TMR-TSX TMAC Resources Inc. x
1 The Analyst(s) preparing this report (or a member of the Analyst’s member of households have a financial interest in this company.
2 PearTree has managed or co-managed or participated as selling group in a private placement for the issuer’s in the past 12 months.
3 As of the end of the month immediately preceding the date of issuance of this research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month, PearTree collectively beneficially owned 1% or more of a class of the issuer’s equity securities.
4 PearTree has visited projects of the issuer and a portion of the expenses for this travel may have been reimbursed by the issuer.
5 PearTree, the analyst or an associate of the analyst responsible for this report or any individuals directly involved in the preparation of this report hold or are short the issuer’s securities directly or through derivatives.
The research analyst is not aware of any other material conflict at the time of publication.

This newsletter is dedicated to providing insight and analysis on Canadian mineral exploration and development stories. We welcome your feedback.

PearTree Securities is the largest provider of mining flow through capital in Canada. As an exempt market dealer and portfolio manager, PearTree Securities has approximately $250 million available for investments annually.

Upcoming Conferences & Events

PDAC 2017 Convention in Toronto – March 5-8, 2017

European Gold Forum 2017 in Zurich, Switzerland – April 4-6, 2017

CIM Convention in Montreal – April 30 – May 3, 2017

Canadian Mining Symposium in London, U.K. – May 9, 2017

Diggers and Dealers in Kalgoorlie, Australia – August 7-9, 2017


Contact Us

David Donato
President, Head of Banking
Email David
416.613.3848 x446

Lisa Davis
Email Lisa
416.613.3848 x437

Gary Baschuk
VP Senior Mining Analyst
Email Gary
416.613.3848 x470

Danny Mah
Managing Director, Oil & Gas
Email Danny
C: 403.615.4917

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